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Australian states oppose federal minerals tax grab

Australia's Federal Government faces a united front from the nation's boom mining states and the resources industry if it moves to scrap the state-based royalty system in favour of a new national tax to reap billions from the sector. The Henry tax review, now in the hands of the federal government, is expected to have recommended a new project-based federal resources rent tax of 40%, which will be based on the petroleum resource rent tax.

The major mining companies yesterday declined to comment on the proposal, saying they would wait for the government's response to the review, due within months. But insiders told The Weekend Australian it represented a"real threat" to the sector and would be opposed by the states.

It has been reported that if the petroleum tax system had been applied to the nation's major miners and top commodity exports over the past three years, it would have raised an extra A$14 billion from the sector.

Aggressive opposition to the anticipated proposal is gaining momentum, with the key mining states of Western Australia and Queensland agreeing they would vehemently argue against any transfer of taxing responsibility to the federal government. In their submissions to the tax review, both state governments appeared to be open to debating alternative methods to taxing the resource sector but were firmly of the view that the right to do so should remain with the state.